e) Suppose they agree in advance to choose the efficient number and to split the cost of the movies equally. When Judd is asked his willingness to pay, will he have an incentive to tell the truth? If so, why? If not, what will he be tempted to say? Since they are all paying equal shares, Judd is going to have high praises and say the movies are going to be good because he has a higher value on the movies, his truth value is going to be higher because he values them more because his cost is higher. f) What does this example teach you about the optimal provision of public goods? That optimal provision of public goods is going to happen of individuals don't have much of an incentive to hide the value they place on the good(s). Each individual has a cost that can't be related to his valuation.
There is often litter along the highways but rarely in people's yards. Provide an economic explanation for this fact. Highways are public areas where there is not one person responsible for cleaning up the trash, except government employees. The government workers are more busy making road safe. There are not any incentives for those who litter on the highway. People will go out on their own and pick trash up that is thrown onto their property but they won't randomly stop along the highway to clean up litter. I see this typically left for inmates if they are available.
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